One Angry Bus Driver Tries to Put the Brakes on DWP Rate Hikes

Like most cities, Los Angeles is overwhelmingly Democratic. The mayor, controller and city attorney are Democrats. Of the 15 members of the City Council, all but one is a Democrat. That does not mean that city politics are free from conflict, it just means that the conflicts are not primarily ideological.

Instead, the primary fault line is between insiders and outsiders. Most seriously contested elections come down to a race between a candidate who is more favored by City Hall interests — organized labor, business groups, developers and so on — and one who is less favored by them.

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This fault line was on clear display on Tuesday night, when Cal State L.A. convened a panel to discuss reform at the Department of Water & Power. For more than an hour, a bunch of insiders — the mayor, the general manager of the DWP, some commissioners — held the floor. They talked about process, and governance and reforming the city charter — insider stuff.

But then it was question time, and the outsiders got their say.

"These rates have been going real bad," said Earis Vails, an African-American bus driver who lives in South L.A. "We don't make no money. We're in a recession. How you guys keep going up?"

Marcie Edwards, the DWP general manager, tried to respond, saying that rates go up because of "pass-through costs" and the department is working to improve its "internal productivity measures."

Vails was unsatisfied with that answer. She was also totally uninterested in the hourlong discussion that preceded her question, in which Edwards and other insiders bemoaned the cumbersome bureaucratic procedures that make it difficult to get anything done at the utility.

"That's not important to me. That's their in-house problem," Vails said in a follow-up interview. "That's your house you need to take care of. But don't make me suffer because you don't have your stuff right."

This cuts to the heart of the debate over DWP reform: Who is it for? Is it for the insiders, who talk about greater "efficiency" and "streamlining" of processes? Or is it for people like Earis Vails, who just want rates kept low, and who suspect that the DWP is wasting the money it already gets on lavish compensation for unionized workers?

Councilman Felipe Fuentes is the driving force behind DWP reform. He has often said that his purpose is to "remove politics" from the utility. He has not, however, clarified what he means by that. By "politics," does he mean the voice of people like Earis Vails?

After Tuesday's meeting, this reporter pursued Fuentes out of the auditorium, asking him to give an example of political interference at the utility. Fuentes remained silent. He tried to escape across the street, but the light was against him, so for a solid 45 seconds he stood in perfect silence as he was given variations of the same question: Name an example of political interference. Finally, the light changed and he walked away.

This is not a trick question. It is basic to the issue of whom DWP reform is for. Thankfully, Fuentes is not the first to bemoan "political interference" at the utility, so it's possible to trace the roots of this idea. Another person who has complained about it is Brian D'Arcy, who is the head of IBEW Local 18, which represents more than 90 percent of DWP workers, and who is perhaps the most insidery insider in all of L.A. politics.

The theme also pervades the recent audit of the department prepared by Navigant Consulting. One of the recommendations in the audit was to "de-politicize the governance structure by distancing the utility from the primary political bodies." In an interview, Andrew Rea, the primary author of the audit, was able to offer an example of political interference.

Rea referred to the 2010 battle between the City Council and the DWP over a proposed rate hike. The council held off on approving the increase, and in retaliation the DWP threatened to withhold $73 million from the city's coffers. The council was so angered by this that it created a ratepayer advocate to offer independent advice. Most normal people forgot about this a long time ago, but within the DWP the scars are still fresh.

"It was a horrible process," Rea said. "You had a situation where DWP management decided they wanted one thing and it didn’t true up with what the mayor wanted and what the council wanted. You had a significant conflict, and it resulted in no rate action for a period of time. And then the rate action that was taken was less than what the department asked for."

This is the best answer yet given to the question of what problem DWP "reform" is intended to solve. The DWP wanted a big rate increase, but the council wouldn't approve it. A rate increase, to a utility, is like oxygen, and the council was standing on DWP's windpipe.

Fuentes' reform measure would change that, allowing the DWP commission to set rates. The council could review them, but only if two-thirds of the members chose to do so. (One can imagine the council preferring to leave that hot potato at the commission.) The commission would be further insulated from "politics" by giving the commissioners staggered terms of fixed duration, without the option of removal by the mayor.

In her answer to Vails, Edwards, the DWP general manager, endorsed the idea of letting the commission set rates. "As long as the mayor and the council have the ability to assert jurisdiction ... I would be comfortable with that."

Of course she would. It is a reform that appeals to insiders. It would allow them to run the DWP unfettered by political constraints. In Rea's words, it would allow rates to go up in a "consistent, repeatable and effective" manner.

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"The DWP's rate cycle is so highly irregular and so governed by election cycles," Rea said. "Much more regular funding would avoid a lot of stop-start on programs."

From the utility's point of view, that's a good thing. It is not a good thing if you're Earis Vails.

"They go up every year," she said. "They keep talking about infrastructure — they haven't done any infrastructure. It's mostly they're getting raises." (This is not the insiders' diagnosis. "The union is a key stakeholder and does a lot of good," Rea said.)

"They're only worried about what they're doing on the inside," Vails continued. "We’re not interested in what your problem is. We just want you to turn around and stop taking our money and going up on the rates."